Gun Lake Casino in Dispute with Michigan Over $7 Million Payment

The Gun Lake Tribe has halted payments to Michigan’s economic development agency over the introduction of online lottery sales and other electronic games in the state. (Image: MLive.com/The Grand Rapids Press)

When states allow Native American tribes to operate casinos, they are typically looking for one very big benefit: a share of the revenues that the new casino brings in.

But in order to get that money, states typically have to make sure promises to the tribes in return, and when those deals appear to be violated, what happens to all that guaranteed revenue starts to become much less clear.

That’s the case right now in Michigan, where the Match-E-Be-Nash-She-Wish Band of Pottawatomi Indians (better known as the Gun Lake Tribe) refused to make a scheduled $7 million payment to the Michigan Economic Development Corporation (MEDC), saying that state officials have violated the 2007 compact that called for those payments.

Dispute Over Online Lottery Sales, Electronic Pull-Tabs

Over the past year, the state has allowed for Internet lottery sales as well as some electronic pull tab machines in social clubs.

The Gun Lake Tribe says that these count as electronic games of chance operated by the lottery, which under the compact would allow the tribe to cut its revenue payments to the state.

“The Tribe and the State began discussing this matter prior to the introduction of Internet lottery sales,” the Gun Lake Tribal Council said in a statement sent to 24 Hour News 8. “At that time, it was clear that Internet lottery sales would result in elimination of the Tribe’s state revenue sharing payments.”

Online lottery sales began in Michigan last August, and since then the state has generated nearly $16 million in revenue through the new products.

In addition, about 40 electronic pull tab machines have been placed in social clubs throughout the state this year as part of a pilot program.

Strong Relationship Could Lead to Resolution

Despite the new lottery games last year, the tribe did make their last payment in December 2014, citing its strong relationship with the state.

“The Tribe would like to emphasize that it has established a good working relationship with Governor Rick Snyder’s administration and has every intention of resolving this matter amicably for the benefit of all parties,” the statement read.

The state government seems to want to keep that relationship strong, even if they clearly disagree about whether the new games are in violation of the compact.

“There are discussions about different interpretations of the compact,” Dave Murray, a spokesman for the governor’s office, said in a statement. “The Governor is award of the tribe’s decision to without economic incentive payments to the state under the 2007 tribal-state Class III gaming compact. Since entering into the compact with the tribe in 2007, the state has and will continue to uphold its obligations under the compact and remains committed to good faith discussions with the tribe to restore its obligations.”

The tribe’s decision could have a major impact on the MEDC, which relies on payments from Indian casinos in the state for its budget.

The agency has said that it will have to cut staff now that the Gun Lake Tribe, which pays an average of $13 million a year into the MEDC, has skipped their June payment.

About half of the tribes in the state that operate casinos no long make revenue sharing payments to the state of Michigan as a result of the state allowing three commercial casinos to open in Detroit in 1999.